The Gold market is heating up as North Korea has issued a stiff warning to the U.S. CNN is reporting a statement from officials in Pyongyang, North Korea’s capitol saying that the “current grim situation” justifies North Korea’s “self – defensive and pre-emptive strike capabilities with the nuclear force at the core. We will make the U.S. fully accountable for the catastrophic consequences that may be brought about by its high-handed and outrageous acts.”
President Trump is talking tough in a tweet said, “North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them.”
These strong words have gotten the Wall Street traders back into the gold market this morning. Last week when the U.S. hit Syria with missiles, everyone thought no big deal, this was a “one off,” so they ignored the news and when the market absorbed all the news the market sold off.
The potential showdown with North Korea is a completely different animal, and here’s why: In the event that this escalates, some Wall Street traders believe that congress will be so tied up addressing President Trump’s actions that healthcare and tax reforms will be put on the back burner. Remember, the Wall Street Gold traders are looking for a pop in the market where they can earn $15 or $20 dollars in a day or two and historically are not long term holders of gold.
This type of news plays right into their thinking as the rally starts off slow they buy in on the news and then the rally accelerates. And as I’m writing this comment that’s exactly what’s transpiring.
North Korea is looking at our deployment of 5000 sailors and 60 aircraft on the USS Carl Vinson escorted by guided missile destroyers USS Wayne E Mayer and Michael Murphy and the guided Missile cruiser USS Lake Champlain.
Saturday, April 15th, is a special holiday in North Korea. It’s the birth anniversary of Kim ll-sung, founder and President of North Korea. It’s the most important national holiday in the country. Kim ll-sung’s birthday, which has been an official holiday since 1968, was renamed Day of the Sun in 1997, three years after his death. A commentator on Fox news this morning said, “I wouldn’t be surprised if on Saturday to commemorate the holiday Kim Jong-un will launch a missile, which I’m afraid could be shot down by one our military cruise missiles.” If that happens only God knows how that would end.
The point I’m trying to make is you need to watch this market closely as the comments of one Wall Street Trader put it, “it would take only one tweet from the President to move the gold market in an unexpected way.” That’s why the Wall Street Gold Traders have been on the sidelines. But we all must believe that the next Trump tweet
will not be wishing Kim Jong-un a wonderful holiday. As we approach a three day holiday at the end of the week positioning yourself for the unexpected might be a wise move.
Seatbelts fastened. I expect the next few days we will see a very active Gold market.
Have a wonderful Tuesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.